- Polkadot has experienced renewed demand pressure at a multi-year support level of $3.6.
- Classic on-chain metrics highlight a growth in active and new addresses despite the bearish trend.
- The correction in DOT price is influenced by an overhead trendline.
Explore the latest developments in Polkadot’s price action, driven by key support levels, on-chain metrics, and market dynamics.
Polkadot Price Signal Reversal From Major Support
Over the past two weeks, the cryptocurrency market has undergone a significant correction, driven by recession fears and sell-offs in traditional markets. Polkadot (DOT) was not immune to this trend, experiencing a sharp decline of 44.55% from $6.47 to $3.6.
The $3.6 level has held firm since October 2020, acting as a critical support point for the coin. This level is significant as it marked the last correction bottom before a remarkable 233% rally. This sustained demand at the $3.6 support has contributed to a 26% surge in DOT’s price to $4.5, subsequently increasing Polkadot’s market cap to $6.68 billion.
On-Chain Metrics Show Network Growth
The on-chain metrics from The Block indicate notable recovery and growth activity on the Polkadot network. Specifically, the number of unique addresses on the Polkadot Relay Chain, calculated on a 7-day moving average, increased from 956 to 1,100 in a week, which represents approximately a 15% growth.
Similarly, the number of active addresses on the Polkadot Relay Chain surged by about 25%, rising from 5,630 to 7,030. These metrics reflect enhanced user engagement, growing activity on the network, and possibly greater adoption of the Polkadot ecosystem.
Market Trends and Potential Downside
Despite these positive on-chain developments, the broader market trends suggest that selling pressures could persist. Cryptocurrencies, including leading assets like Bitcoin and Ethereum, saw declines of 2-4%, reflecting broader market bearishness. There is a risk that Polkadot’s price could test the $3.6 support again, and a potential breakdown could lead to an 18% drop, hitting the psychological $3 level.
Technical Indicators and Future Projections
The Relative Strength Index (RSI) for Polkadot currently sits at 29%, indicating that the coin is in oversold territory. Typically, when the RSI falls below 30%, it suggests that the asset may be undervalued, attracting more traders. If demand increases, Polkadot could rally up to 16%, challenging the downsloping trendline at approximately $5.3.
Conclusion
In conclusion, while Polkadot has demonstrated resilience at the $3.6 support level, on-chain metrics show promising signs of network growth and increased user engagement. However, the broader market remains cautious, and selling pressures could persist. Traders and investors should monitor these support levels and market signals closely to anticipate future price movements.
